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12฀฀CISCO฀SYSTEMS,฀INC.
JOHN฀T.฀CHAMBERS
PRESIDENT฀AND฀CHIEF฀EXECUTIVE฀OFFICER
Fiscal฀2004฀represented฀a฀year฀of฀solid฀execution฀and฀฀
growth฀in฀almost฀all฀aspects฀of฀Cisco’s฀business.฀Given฀฀
our฀financial฀performance,฀product฀and฀market฀lead-
ership,฀geographic฀balance,฀and฀very฀good฀traction฀in฀
key฀growth฀opportunities—including฀core฀routing฀and฀
switching,฀Advanced฀Technologies,฀and฀the฀service฀
provider฀market—we฀believe฀we฀have฀uniquely฀฀
positioned฀Cisco฀as฀the฀global฀economic฀recovery฀
gains฀momentum.฀
In฀fiscal฀2004,฀Cisco฀invested฀more฀than฀$3฀billion฀
in฀research฀and฀development฀in฀order฀to฀drive฀our฀
leadership฀in฀technology฀innovation.฀Our฀investment฀
resulted฀in฀many฀new฀product฀and฀system฀introduc-
tions฀during฀the฀year,฀as฀well฀as฀a฀strong฀channel฀฀
of฀new฀products฀and฀systems฀for฀fiscal฀2005.฀
These฀products฀and฀systems฀offer฀differentiated฀
value฀to฀our฀customers฀that฀we฀believe฀no฀other฀
company฀in฀our฀industry฀can฀match.฀We฀exceeded฀
our฀pro฀forma฀profit-after-tax฀target฀of฀20฀฀
percent,฀while฀maintaining฀our฀commitment฀to฀฀
offer฀solutions฀with฀price฀and฀performance฀
advantages฀to฀customers฀and฀partners.฀This฀
balance฀between฀profitability฀and฀customer฀
success฀may฀be฀one฀of฀our฀best฀accomplish-
ments฀as฀a฀company฀and฀something฀that฀
only฀a฀few฀IT฀companies฀have฀accomplished฀
over฀the฀last฀several฀years.฀
Cisco’s฀key฀stakeholders—customers,฀partners,฀
employees,฀and฀shareholders—remain฀at฀the฀
center฀of฀our฀strategy.฀Fiscal฀2004฀reflected฀our฀
passionate฀focus฀on฀the฀needs฀of฀our฀key฀stake-
holders,฀during฀a฀time฀of฀industry฀recovery฀and฀
growth.฀As฀Cisco฀celebrates฀its฀20th฀anniversary฀
this฀year,฀our฀role฀as฀a฀trusted฀business฀and฀฀
technology฀partner฀is฀becoming฀increasingly฀important฀
as฀our฀customers฀focus฀on฀future฀investments฀that฀
drive฀profitability,฀productivity,฀return฀on฀investment,฀
and฀cost฀savings.
FISCAL฀2004฀PERFORMANCE
In฀fiscal฀2004,฀Cisco฀showed฀strong฀performance฀across฀฀
all฀financial฀and฀operational฀metrics.฀Revenue฀for฀fiscal฀฀
2004฀was฀$22฀billion,฀compared฀to฀fiscal฀2003฀revenue฀
of฀$18.9฀billion.฀Fiscal฀2004฀net฀income฀on฀a฀generally฀
accepted฀accounting฀principles฀(GAAP)฀basis฀was฀$4.4฀
billion,฀compared฀to฀fiscal฀2003฀GAAP฀net฀income฀of฀
$3.6฀billion.฀GAAP฀earnings฀per฀share฀on฀a฀fully฀diluted฀
basis฀for฀fiscal฀2004฀were฀$0.62,฀compared฀to฀$0.50฀
for฀fiscal฀2003.฀Cisco฀generated฀$7.1฀billion฀in฀cash฀
flows฀from฀operations฀during฀fiscal฀2004,฀along฀
with฀our฀GAAP฀net฀income฀of฀$4.4฀billion,฀which฀฀
illustrates฀the฀continued฀quality฀of฀our฀earnings.
Cisco฀successfully฀delivered฀on฀all฀three฀of฀฀
the฀financial฀priorities฀outlined฀in฀fiscal฀
2003.฀First,฀we฀balanced฀the฀need฀to฀grow฀฀
our฀business฀while฀achieving฀pro฀forma฀฀
net฀income฀in฀excess฀of฀20฀percent฀of฀
revenue.฀During฀fiscal฀2004,฀we฀had฀a฀
year-over-year฀increase฀in฀revenue฀of฀
approximately฀17฀percent,฀marking฀the฀first฀
year฀of฀double-digit฀revenue฀growth฀since฀
fiscal฀2001.฀Our฀revenue฀growth฀is฀a฀result฀of฀
a฀gradual฀global฀economic฀recovery,฀coupled฀
with฀increased฀information฀technology-related฀
capital฀spending.฀฀฀
฀
LETTER฀TO฀SHAREHOLDERS
TO฀OUR฀SHAREHOLDERS: